What is an “obscene profit?” Drug company return on investment is similar to other high-tech, capital and skilled-labor intensive industries: https://www.forbes.com/sites/johnlamattina/2018/01/23/about-.... Their net margins are somewhere between software and semiconductors: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/.... Does Intel (not to mention Google or Facebook) make “obscene profits?”

(Note the first source is data collected together by someone at Pfizer; the second source is a study by an NYU Business School professor. These are public financials, you can run the numbers yourself on Yahoo Finance.)

> Does Intel (not to mention Google or Facebook) make “obscene profits?”

Nope but no-one dies in the US because they didn't get access to a 7th generation Intel CPU because they got replaced by a 9th generation that's 2% better and twice as expensive.

That’s an argument for having the government pay for drugs, not for changing the process by which the drugs are developed. From the supply side, either private sector innovation works or it doesn’t.

According to IDC, North America spends $750 billion a year on IT, twice as much as it does on pharmaceuticals. People would save a lot of money if those costs came down. Can we do that by having the government come in and regulate the price of computers and IT contracts? Profits may go down, but that would be okay, because we’d get the same IT products and services for cheaper, right? Why don’t we do that?

We don’t do it because when it comes to less emotionally charged issues, we think clearly. We know that if we did that, talent and capital would leave for greener pastures, and that would compromise innovation.

The point is that if drug prices in the US go lower maybe profit will go down but drug development won’t stop because they still will be making profit.

It's not enough to make a non-zero profit. You have to be as profitable as similarly risky industries, or else capital will flow to those industries instead. Drug development is similar to tech in many respects--a lot of the work is done by startups (which are later acquired by the big companies). If profits go down, the money for acquisitions goes down, and the incentives to form and invest in the startups goes down. Instead, the capital goes elsewhere.

If the government decided that Internet tech companies were "obscenely profitable" and started regulated prices so profits went down to 10% (instead of 30%+ for some companies like Facebook), do you think Silicon Valley would still produce the same output?